ATISHAY JEWELLERS PVT. LTD.,DELHI vs. ITO WARD 3(4), DELHI

Aggrieved by the order of Ld.CIT(A), assessee is in appeal before the Tribunal by taking following grounds of appeal:-

“The appeal order dt. 22.08.2025 u/s 250 is bad in law. 2. On the peculiar facts of the case and in law, the learned CIT(A) ought to have taken into consideration the assessee's written submissions & other been uploaded vide ack.no.735628551301124 which were very much available on the portal. 3. On the peculiar facts of the case and in law, the learned CIT(A) ought to have disapproved the learned AO's action of rejecting the declared trading results and books of account in terms of section 145(3), particularly when the learned AO had failed to point out any defect/discrepancy in the books of account. 4. On the peculiar facts of the case and in law, the learned CIT(A) ought to have disapproved the learned AO's action of doubting the sales which were found recorded in the books of account during the period 01.10.2016 to 08.11.2016 (duly audited by a firm of chartered accountants). 5. On the peculiar facts of the case and in law, the learned CIT(A) ought to have disapproved the learned AO's action of estimating the cash sales for the period 01.10.2016 to 08.11.2016 at Rs.100000/-. 6. On the peculiar facts of the case and in law, the addition made at Rs.6725033/- u/s 68 is liable to be deleted. 7. On the peculiar facts of the case and in law, the learned CIT(A) ought to have disapproved the learned AO's action of adopting GP rate of 10% and thus making trading addition at Rs.2959572/- 8. On the peculiar facts of the case and in law, the addition made at Rs.2959572/- is liable to be deleted. 9. Charging income tax & surcharge at special (higher) rate for AY 2017-18 is illegal and unjust.”

Heard the contentions of both parties at length and perused the material available on record. In the instant case, AO has made addition towards cash deposits towards demonetization period where out of INR 70,25,000/- cash deposit in SBN during demonetization period. The AO has allowed the sum of INR 2,99,967/- that is profit declared on such cash deposit treated as sales and added the remaining amount of INR 62,750/- as undisclosed income u/s 68 of the Act. Besides this, AO invoked the provision of section 145(3) of the Act and made the trading addition of INR 29,59,572/- by estimating the net profit @ 10%.

In the instant case, the assessee ahs claimed that cash deposit was out of the sales made in cash before the period of demonetization and the majority of such cash sales during the period 01.11.2016 to 08.11.2016 whereas as compared to preceding year such sale was abnormally high. AO observed that the assessee has further failed to established the purchases made as supplier have not responded to the notice issued u/s 133(6) of the Act. All these facts lead to facts that the trading results declared by the assessee are not depicting the true picture. Accordingly, the provision of section 145(3) of the Act as invoked by rejecting the books of accounts. We find that in the present circumstances of the case, such action of AO is correct looking to the facts of the case. Now coming to the issue of addition that once AO has rejected the books of accounts and made the estimation of income, no further addition could be made on account of cash deposits during demonetization period in SBN therefore, we direct the AO to delete the addition of INR 67,25,033/-0 made u/s 68 towards cash deposits during demonetization period. With respect to the estimation of the income and looking to the entirety of the case and in our considered view, profit rate @ 6 % on the gross turnover would meet the end of justice. Accordingly, we direct the AO to apply 6% profit rate on the gross turnover and compute the amount of addition. Needless to say, that the provision of section 115BBE of the Act are not applicable as we uphold the trading additions in the instant case or no addition u/s 68 is uphold by us. 7. In the result, the appeal of the assessee is allowed.